Cryptocurrency Vs. Forex Trading: Pros And Cons

If you’re looking to start currency trading, you’re probably wondering…

“What’s the difference between currency trading and cryptocurrency trading? And which one is better?”

First fact: The foreign currency exchange (or Forex) market and the cryptocurrency market are separate.

These markets have unique aspects that make them appealing to traders.

The Forex market is the largest, most liquid market in the world. It’s a decentralized global market, where all the currencies in the world are traded.  As a global market, the Forex is influenced by many factors, such as political announcements, inflation numbers and jobs reports. On average, $5.3 trillion is traded in the Forex per day.

Cryptocurrencies, while often referred to as “digital currencies,” aren’t the same as currencies like the U.S. dollar or the Japanese yen.

While currencies in the Forex market are backed by a centralized government, cryptocurrencies are not. They are hosted online and backed by a peer-to-peer authentication process that prevents you from using a cryptocurrency (such as a Bitcoin) more than one time.

The network also generates cryptocurrencies in exchange for people working to secure the network and check entries in exchange for digital cash. These people are referred to as miners.

The global cryptocurrency market has previously reached a market cap of more than $700 billion. Some experts predict that number will only climb.

Cryptocurrency trading is similar to forex trading in that they both involve exchanging a currency for another currency. However, the cryptocurrency market and the forex market are influenced by different factors.

Historically, the crypto market is more unpredictable and volatile.  For extreme foreign currency couples in the Forex, volatility is around 1%, and .5% for most of the established currencies. To compare, Bitcoin has a volatility around 5% to 15%.  That’s why cryptocurrencies can be appealing to traders with a high risk tolerance.